Pending home sales surged in August after two months of declines
A for sale sign shows the home as being “under contract” in Washington, DC, November 19, 2020.
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Signed contracts to buy existing homes increased 8.1% month to month in August, according to the National Association of Realtors, as buyers encountered higher inventory and slightly more favorable prices.
Analysts had expected an increase of 1% per month. The August 2020 sign-ups were 8.3% lower than in August 2020.
According to NAR, August’s rise came after two months of declining sign-ups.
These “pending home sales” are an indicator that signed contracts will be completed within one to two weeks.
Lawrence Yun (NAR chief economist) said that buyers are returning to the market due to rising inventory and moderate price changes. The home price increases are three times the wage growth, making affordability difficult.
Home prices in July were up nearly 20% nationally year over a year, according to the latest S&P Case-Shiller home price index, but that is a three-month average going back to May. Agents say that the increase in supply has reduced bidding wars.
The least expensive regions saw the greatest sales growth, the Midwest and South. This is due to the fact that buyers were more inclined to move to these areas because of the remote nature of some jobs.
Yun explained that “the more affordable regions in the South or Midwest have seen a greater number of buyers signing contracts to purchase, which isn’t surprising.” This can be explained by some workers who are able to work anywhere they want, and choose to live in less expensive areas.
In the Midwest, sales rose 10.4% monthly and were down 5.9% from August 2020. Sales in the South increased by 8.6% each month, while they fell 6.3% annually.
The West saw sales rise 7.2% per month, but were 9.2% lower than a year ago. Pending sales rose 4.6% in the Northeast month to month but were down 15.8% from a year ago.